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Supreme Court to decide several cases affecting labor & employment in 2011-2012 term

In the 2011-2012 term, the United States Supreme Court will consider a number of cases that may impact employers and employees. These cases are briefly summarized below.

Roberts v. Sea-Land Services, Inc.

In Roberts v. Sea-Land Services, Inc., No. 10-1399, the Supreme Court will rule on the maximum weekly rate that applies to an employee’s compensation for disability under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

The LHWCA requires employers to provide compensation for the disability or death of a maritime employee “if the disability or death results from an injury occurring upon the navigable waters of the United States.” It provides that the rate of compensation “shall not exceed an amount equal to 200 per centum of the applicable national average weekly wage, as determined” by the Secretary of Labor. Further, “[d]eterminations [of the national average weekly wage] with respect to a period shall apply to employees . . . currently receiving compensation for permanent total disability . . . during such period, as well as those newly awarded compensation during such period.”

Dana Roberts was awarded disability compensation under the LHWCA, but challenged the maximum weekly rate awarded. Roberts contended that the administrative law judge (“ALJ”) erred by holding that he was “newly awarded compensation” in fiscal year 2002, when he first became disabled. Roberts argued that he was not “newly awarded compensation” until fiscal year 2007, when the ALJ issued his decision making a formal award of compensation, and therefore the ALJ should have used the national average weekly wage with respect to fiscal year 2007 in calculating the maximum rate applicable. The Ninth Circuit disagreed, finding that an employee is “newly awarded compensation” within the meaning of the LHWCA when he first becomes entitled to compensation – here, in 2002. Therefore, the ALJ properly applied the 2002 fiscal year maximum rate. The Supreme Court’s decision will clarify the appropriate means of calculating compensation under the LHWCA.

Knox v. Service Employees International Union

In Knox v. Service Employees International Union, No. 10-1121, the Supreme Court will address the question of whether a union is required to send, in addition to an annual fee notice to nonmembers, a second notice when adopting a temporary, mid-term fee increase to fund political expenditures.

Non-union California state workers filed suit against the Service Employees International Union (“SEIU”), the bargaining agent for state employees. California state employees who choose not to join the union are required by collective bargaining agreement to pay a “fair share fee” to cover the costs of union representation on their behalf. However, the union is required to send these employees a yearly notice explaining the basis for the fee assessment, known as a Hudson notice. The purpose of the Hudson notice is to provide nonmembers with an adequate explanation of the basis of the agency fee. The Hudson notice provides that for thirty days after the notice is issued, non-union employees can object to the collection of the full agency fee, and elect instead to pay a reduced rate during the upcoming fee year based on the percentage spent for non-representational activities

Here, the SEIU properly issued its annual Hudson notice. However, the SEIU subsequently adopted a temporary mid-year fee increase for expenses not related to the union’s representation costs, but rather for a “Political Fight Back Fund” for use in opposing “anti-union” ballot propositions. The union did not issue a second Hudson notice, and plaintiffs filed a class action lawsuit. They argued that SEIU’s subsequent assessment of the mid-year fee increase without a second notice violated its requirement to provide them with an explanation of the fee as well as an opportunity to object. The district court agreed. The Ninth Circuit reversed, holding that the SEIU’s notice complied with the Hudson procedural requirements and that a second notice was not required. The Supreme Court’s decision will clarify organized labor’s obligations in this type of situation.

Former Maryland Court of Appeals employee Daniel Coleman sued under the self-care provision of the FMLA, alleging that he was fired after requesting sick leave for his own medical condition. The district court dismissed Coleman’s claim on the basis of Eleventh Amendment immunity.

The Fourth Circuit considered whether Congress validly abrogated the states’ Eleventh Amendment immunity with respect to the FMLA’s self-care provision. In order for the abrogation to be valid, “[t]here must be a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end.” The Supreme Court had previously ruled that the FMLA’s family-care provision, which relates to caring for a family member with a serious health condition, constituted a valid abrogation of the states’ sovereign immunity. In so holding, the Supreme Court focused on the gender-related nature of that provision of the FMLA and found that it was enacted in response to the states’ record of unconstitutional participation in genderbased discrimination in the administration of leave benefits.

The Fourth Circuit found that Congress did not validly abrogate sovereign immunity as to the FMLA’s self-care provision. The court noted that the FMLA’s legislative history showed that preventing gender discrimination was not a significant motivation for Congress in including the self-care provision, nor was there evidence establishing a pattern of the states as employers discriminating on the basis of gender in granting leave for personal reasons. Therefore, Coleman’s FMLA claim was barred by the Eleventh Amendment. State employers should pay close attention to the Supreme Court’s ruling in this case.

Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC

The Supreme Court granted review in Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, No. 10-553, to clarify whether the First Amendment’s “ministerial exception” extends to teachers in religious schools who teach the full secular curriculum, but also teach daily religion classes, are commissioned ministers, and regularly lead students in prayer and worship.

Cheryl Perich sued her former employer Hosanna-Tabor, a Lutheran school with students in kindergarten through eighth grade, alleging that the school retaliated against her in violation of the American’s with Disabilities Act (“ADA”). Perich taught math, language arts, social studies, gym, art, and music using secular textbooks. She also had the title of “commissioned minister” and taught a religious class four days per week for thirty minutes, attended a chapel service with her class once a week for thirty minutes, and led each class in prayer three times a day.

The district court dismissed the case on the grounds that the court could not inquire into Perich’s claims of retaliation because they fill within the First Amendment’s “ministerial exception” to employment laws including the ADA. The “ministerial exception,” which is grounded in the First Amendment’s protections for the freedoms of religious exercise, speech, and association, allows religious entities to give “preference in employment to individuals of a particular religion” and to “require that all applicants and employees conform to the religious tenets of such organization.” For the ministerial exception to bar an employment discrimination claim, (1) the employer must be a religious institution and (2) the employee must be a ministerial employee.

The Sixth Circuit reversed, finding that the district court erred in classifying Perich as a ministerial employee, because the fact that Perich participated in and led some religious activities throughout the day did not make her primary function religious. The court emphasized that teachers at Hosanna-Tabor were not required to be Lutheran to conduct these religious activities. Moreover, the fact that Hosanna-Tabor had a generally religious character did not transform Perich’s primary responsibilities in the classroom into religious activities. Finally, the Sixth Circuit found that Perich’s claim would not require the court to analyze any church doctrine. As the ministerial exception potentially applies not only to the ADA but also Title VII, the ADEA, and other employment laws, the Supreme Court’s ruling could have broad implications for religious employers.

Valladolid v. Pacific Operations Offshore, LLP

In Valladolid v. Pacific Operations Offshore, LLP, No. 10-507, the Supreme Court will decide whether an outer continental shelf worker who is injured on land is eligible for compensation under the Outer Continental Shelf Lands Act (“OCSLA”).

Juan Valladolid was an employee of Pacific Operations Offshore who was stationed primarily on an off shore drilling platform. He was killed on the grounds of Pacific Operations’ onshore oil-processing facility when he was crushed by a forklift. His widow sought workers’ compensation benefits under OCSLA and the Longshore and Harbor Workers’ Compensation Act. The LHWCA provides compensation for the disability or death of a maritime employee “if the disability or death results from an injury occurring upon the navigable waters of the United States.” Under OCSLA, LHWCA benefits are extended to the “disability or death of an employee resulting from any injury occurring as the result of operations conducted on the outer continental shelf . . .” An ALJ denied benefits on the grounds that Valladolid’s injury had occurred outside the geographic situs of the outer continental shelf, and the Benefits Review Board agreed. The Ninth Circuit considered whether OCSLA imposed a “situs of injury” requirement – granting benefits only for those injuries that actually occurred on the outer shelf – or whether, as the Third Circuit previously held, the claimant need only satisfy a “but for” test in establishing that the injury occurred “as the result of” operations on the outer continental shelf. The Ninth Circuit concluded that OCSLA required that “the operations must be conducted on the outer continental shelf. However, the only limitation on the injury is that it be ‘the result of’ operations on the outer continental shelf.” Therefore, the court concluded that OCSLA provides coverage for any injury caused by outer continental shelf operations, regardless of where the injury occurred. However, the claimant must establish a substantial nexus between the injury and extractive operations on the shelf. The Supreme Court’s ruling will resolve this circuit split and clarify the limits of liability under OCSLA.

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